Search in:

Tax Office sued for $6m after allegedly ruining a man's life

Noel Towell

When Gary Kurzer’s day in court against the Australian Tax Office finally arrives in September, he believes he will be fighting for thousands of ordinary Australian taxpayers.

The Sydney man says he lost his business, his home, his marriage and his health trying to fight the legal might of the Tax Office after a botched tax bill based on ''incorrect methodologies'' sparked a eight-year legal dispute.

The struggle that began in 2006 with a bill for $200,000 in tax and penalties – later corrected to just $8000 – will culminate in a Federal Court showdown in Sydney in September, when the former architect will try to win $5.8 million in damages for the Tax Office’s alleged negligence.

The Tax Office, in its legal defence, says Mr Kurzer’s case is weak and that he will be unable to prove the Tax Office owed him a duty of care, but declined on Wednesday to publicly to discuss the case.

Advertisement

The Tax Office is coming under increased scrutiny for its conduct of disputes and imposition of penalties.

A report published last week by the Inspector-General of Taxation found that up to 35 per cent of the $4.25 billion of tax penalties in the past three years were unfairly imposed and were later reduced.

Top Tax Office officials fronted a Parliamentary committee in Canberra on Wednesday afternoon to defend their agency’s record on disputes with taxpayers.

Mr Kurzer, who has rejected a Tax Office offer to settle the case, said that his experience was just one of thousands of bad Tax Office decisions that had destroyed lives.

The former architect’s troubles began in 2006 when he and his ex-partner sold two seaside units in Terrigal on the NSW central coast and the Tax Office decided that he was liable for a $200,000 GST bill on the proceeds of the sale.

It took five years and action in the Administrative Appeals Tribunal and other forums for the Tax Office to concede its mistake, that Mr Kurzer’s liability should have been just $8554 and his tax liability had been assessed using ''incorrect methodologies''.

But according to his Federal Court case, years of conflict, appeals, claims and counter-claims had taken an emotional, physical and financial toll on Mr Kurzer, who says his emotional problem are so bad that he can no longer work.

He is fighting his case without a lawyer against the might of law firm Minter Ellison hired by the Tax Office, and claiming damages of $5.8 million for economic harm as well as emotional distress, pain and suffering.

Mr Kurzer says a court victory would inspire thousands of Australians battling what they say are unfair Tax Office decisions.

''The Tax Office is allowed to collect what it is entitled to collect,'' he said. ''It is not entitled to harass, to bully, to lie, to cheat, to force people into these situations when they don’t owe the money.

''There is collateral damage to families, to people, to businesses. People are going on welfare, their kids are suffering.''

Mark Chapman of lobby group Taxpayers Australia says that most taxpayers who fall victim to mistakes by the Tax Office do not have the money to fight the taxation officials.

''Kurzer is by no means unique,'' Mr Chapman said. ''At Taxpayers Australia, we receive a steady stream of comments from aggrieved taxpayers who have had to fight tooth and nail for their rights in the face of an intransigent Tax Office.

''Like Kurzer, many of these taxpayers find themselves out of pocket and emotionally scarred. Many simply give up, having no stomach for the continued fight, even though they know they are innocent.''

A Tax Office spokeswoman said the office could not comment on a matter before the court.

Inspector-General of Taxation Ali Noroozi is reviewing the Taxpayer’s Charter and the legal protections afforded to taxpayers.